Cost Plus Insurance, Reference Based Pricing plans should take note of recent federal edicts that may affect the core nature of these plans: RBP Under Seige
Archive for October, 2014
A GRIM TALE OF LIFE INSURANCE FRAUD
Back in the 1930s, the legend of “Mike the Durable” or “Iron Mike” Malloy was born. A former firefighter, Mike Malloy was a homeless drunk man who lived in New York City. Malloy had a favorite watering hole, Marino’s, a speakeasy bar owned by Tony Marino.
The defendants collectively operated as an unlicensed, unregulated and fraudulent insurance company collecting more than $28 million in premiums for health care coverage then denied or unjustly turned down legitimate claims submitted pursuant to the health care plans.
Reimbursements under Obamacare are at bottom-dollar – they are even lower than Medicare reimbursements
The Washington Times (10/28, Richardson) reports that a new study of insurance policies before and after the implementation of the Affordable Care Act “shows that average premiums have skyrocketed, for some groups by as much as 78 percent.”
Average premiums for the 23-year-old demographic rose “dramatically,” with men in that age group seeing a 78.2 percent price increase before government subsidies (welfare) , and women seeing premiums rise 44.9 percent, according to a report by HealthPocket to be released Wednesday. (War on Women or is it War on Men?)
The study, shared Tuesday with the Times, also found that premium increases for 30-year-olds increased 73.4 percent for men and 35.1 percent for women. Kev Coleman, head of research and data at HealthPocket, stated, “It’s very eye-opening in terms of the transformation occurring within the individual health insurance market.” (Eye-opening? Where have you been Kev?)
The article says that reasons for the premium increases include the ACA’s “prohibition on rejecting applicants with pre-existing conditions” and the heightened benefit mandate under the law. (Duh!)
“Companies seeking to boost profits by paying physician kickbacks for patient referrals — as the government contended in this case — undermine impartial medical judgment at the expense of patients and taxpayers,” said Daniel R. Levinson, Inspector General for the U.S. Department of Health and Human Services, in the statement.
People don’t like being told “no,” especially when it comes to something as personal as their health care. They also don’t like rising health-care costs. And therein lies the health-care system’s existential debate about narrow networks.
Editor’s Note: Forget networks. Employer plans should pay Medicare rates only to any provider of choice. It’s up to the insured to deal with balance billing issues. The employer is not your Mama anymore…..
Hospital groups have slammed the so-called “skinny plans,” saying they almost certainly will be blocked by regulators.
“These plans are like buying homeowners insurance that covers broken windows from the first dollar but excludes coverage for your house burning down.”
By Anne Zieger | October 24, 2014
- A new study by researchers from UC Berkeley has concluded that hospital ownership of physician groups in California generated 10% to 20% higher overall costs for patient care.
- The research, which was published in the Journal of the American Medical Association, found that total spending per patient was 10.3% higher for hospital-owned physician offices than with doctor-owned practices. Meanwhile, when health systems ran multiple hospital-owned groups, per-patient spending was 19.8% higher.
- One factor in the higher costs observed by researchers is that newly-acquired physician groups often face pressure to refer patients to more expensive imaging and outpatient treatments that can be less expensive at freestanding clinics.
In a recent study it “wiped out cancer in 14 of 16 people with acute leukemia”the scientific journal Nature reported.
Variations on traditional group insurance via insurer-administered self-funding remain the norm for many large employers. But some health systems are considering alternatives in the face of high costs, new regulations and demand for more choice.
The federal government will spend $840 million over the next four years to help doctors move their practices away from a volume-based business model to one that’s focused on rewarding them for good patient outcomes.
By Carolyn Cohn, Richa Naidu and Avik Das
(Reuters) – As fear of Ebola infections spreads to developed economies, U.S. and British insurance companies have begun writing Ebola exclusions into standard policies to cover hospitals, event organizers and other businesses vulnerable to local disruptions.
Ebola is a devastating disease for its victims, and in the first 20 days of October it has had a devastating effect on the finances of Texas Health Presbyterian Hospital in Dallas.
Yes, but you can’t reside in the United States although you can elect to take treatment there. Here is an excerpt from an offshore health insurance policy marketing piece:
OPTIONAL COVER IN THE USA
To ensure that you only pay for the cover you really need, you can choose whether or not you want to include the USA in your Lifeline insurance cover.
Please Note: Due to the extremely high cost of healthcare treatments in North America, coverage which includes the USA is generally an average of three times the cost of cover for other parts of the world. Therefore, unless you will be spending significant amounts of time in the United States, we recommend that you DO NOT select this option.
Some Americans want to self-insure their health risk up to a point. But under current law, Americans can’t purchase a plan with deductibles higher than $6,600. Gone are the days with Americans could purchase $10,000 deductible plans from carriers like Blue Cross. It is now illegal for an American health insurance company to sell you a deductible of $10,0000, $25,000 or more.
Buying health insurance offshore allows a full array of choices in plan design, at costs significantly lower than one would expect.
A LLoyds syndicate, for example, could underwrite a health policy to be sold to Americans with coverage extended to the USA . However the purchase would necessarily have to be made offshore. To our knowledge no one has come up with such a product yet. The first one that does will do well.
Editor’s Note: Imagine coming back from a trip abroad, going through customs and having to answer the common question we all get asked: “Do you have anything of value to declare?”………..”Why yes, a high deductible health insurance plan from an English insurance company, reinsured through a consortium of carriers from India, China, Singapore, Austrailia and Peru, which I purchased from RiskManagers.us while I was in Costa Rica deep sea fishing.”
Oct 17 (Reuters) – Two privately owned insurance brokers have teamed up with Lloyd’s of London underwriter Ark Syndicate to sell hospitals a product that insures against any loss of profit from Ebola quarantine shutdowns.
British broker Miller Insurance Services LLP said the product it created with U.S. broker William Gallagher Associates would also protect hospitals against any potential losses to revenue in the aftermath of a quarantine. (bit.ly/1pkS72L)
The policies, which Ark began underwriting on Friday, are the first of their kind.
There has been “considerable interest” in the product throughout the United States, Mark Sleet, Professional Risks broker at Miller, told Reuters.
The news comes as U.S. health officials said they were monitoring 16 people in Ohio, including one in quarantine, who had close contact with Ebola-infected Texas nurse Amber Joy Vinson.
Aon Plc said it had created an Ebola task force to monitor the outbreak and help its clients prepare for potential risk exposures, duty of care and human capital concerns.
“The healthcare industry is at the forefront on the Ebola situation and faces a unique and augmented set of risk exposures,” said Gigi Norris, managing director of Aon Risk Solutions’ healthcare practice.
The death toll in the epidemic has risen to 4,546 out of 9,191 known cases in Guinea, Liberia and Sierra Leone, including 239 health workers, according to the World Health Organization. (Additional reporting by Carolyn Cohn in London; Editing by Simon Jennings
“If something cannot go on forever, it will stop” – Herbert Stein
Julie Mueller, Disruptive Health Care Revolutionary
TrueCost offers employers a simple payment structure in which health provider reimbursements are based on fixed Medicare pricing plus a set percentage. “Using a reference based pricing model is consistent, rational and transparent,” said Julie Mueller, president of Custom Design Benefits.
“TrueCost has caught on with many local healthcare providers that have embraced its simplified and efficient reimbursement system.”
Insurance consultants were shocked recently to learn that Obama administration rules allow large companies to offer 2015 worker health plans that don’t include hospital benefits. Now the administration is concerned too.
Last night a +2,000 life South Texas school district was advised by their insurance consultant to remain fully-insured.
The consultant informed the Board of Trustees that over a 6 or 7 year period there would only be a 4% savings under a self-funded arrangement. The consultant informed the board that he has clients with three to four thousand employee lives and “they are, and should be fully-insured.”
A survey of the district’s employees was conducted to determine if plan participants wanted to remain fully-insured or participate in a self-funded health plan.
During the presentation a board member opined that a self funded employee health plan could jeopardize district bond issues “because losses come out of reserves.”
The district is in the midst of a Request for Proposal for Group Medical Insurance for district employees.
Editor’s Note: Mulebriar is a free lance reporterette from Waring, Texas and former Miss Texas. (www.MollyMulebriar.org)
From A Consultant
Who is the consultant? Who is the district? Are you hiding their identity to protect them from public embarrassment?
From An Insurance Agent
Makes perfect sense to me. What better way to hid agent commissions
From A TPA
It is obvious there was a hidden agenda here. The consultant was simply “going along to get along.”
From A Former TPA Owner
There is a software app that tells what a broker makes on a case. It is available by State, Region, and Nationwide. It’s called miEdge. I have used it and it appears to be pretty accurate.
From an actuary: “Medical cost trends include components for many drivers. Net unit price increases from providers drives half of the effect in general. So a 5% increase in a schedule will drive a 10% overall cost increase. The rest of the components include: increased utilization, coding creep, deductible leveraging, etc…”
Editor’s Note: Is this confirmation from an experienced actuary/underwriter that escalator clauses common to all Managed Care Contracts are the driving force behind trend factors?
(Bloomberg) — Gilead Sciences Inc. won U.S. approval for the first all-oral hepatitis C treatment for the majority of people infected with the virus.
Today’s Plan Sponsor
Fact of the Week: The price that hospitals and pharmacies pay for a bottle of 500 tablets of doxycycline, a decades old antibiotic, rose from $1,849 in April from $20 in October 2013 –
“Plan sponsors who don’t audit their group hospital bills ought to have their heads examined” – Homer G. Farnsworth, M.D.
The Department of Treasury, Labor and Health and Human Services released a four page FAQ documenton reference pricing. The FAQ reiterates that the administration will consider that large group and self-funded plans that use a reference-based pricing model for their in-network providers have met their maximum out-of-pocket requirements as long as they take steps to ensure adequate access to care.
Editor’s Note: What is the definition of “adequate access to care?” To consumers (i.e., voters), adequate access to care is a network that includes every doctor and hospital in town. Do Texas Medicaid recipients have “adequate access to care” when less than 30% of Texas physicians accept Medicaid patients? When you mix politics (politicians and bureaucrats) with free market dynamics, politics win every time.
California Encourages Citizens To Sue Health Insurance Companies – Taxpayers To Help Pay For Cost of Lawsuits Against Mean, Greedy Health Insurance CompaniesFriday, October 10th, 2014
Why would any health insurance company want to continue to do business in California?
Group Health Insurance Broker
75% of employers predicted to drop their group health insurance plans…………………….
Remember when “queer” really mean’t “gay” although we didn’t know it at the time?
We received the following from one of our three readers:
- The RAC audits are performed by independent contractors nationally whose process is much like those of AMPS
- All hospitals know that the RAC auditors are in place and looking for overcharges and mistakes
- When the RAC auditors find overcharges (they call them overpayments) hospitals are charged a fine plus the hospital has to rebate overpaid funds
- The RAC auditors are technically marshals of the federal government and have open access to all billing and claim detail as well as the hospital’s internal communications (google the article on Beth Israel Hospitals “Turbocharging”)
The scope of the inaccurate billing issue is well documented,” said Dendy, who established the medical billing auditing firm in 1995 and also serves as senior healthcare consultant for M&A Equity Advisors, a Miami-based mergers and acquisitions firm. “Whatever the causes for inappropriate and inaccurate hospital billing, the problem is universal and large in scale.”
Governmental interference in health care financing (ACA) has had a man made impact on actuarial science. The definition of “insurance” now needs to include terms such as re-distribution of societal wealth ratios, “fairness” loads or debits, sanction penalty calculations, taxation margins, etc.
“Federal judge rules Obamacare subsidies illegal. Will Supreme Court weigh in? – US District Judge Ronald White said the IRS lacked the authority to enact a regulation that allows the federal government to provide tax credits to qualified health care policyholders through health care exchanges.” By Warren Richey for The Christian Science Monitor, September 30, 2014
Professor Bob Graboyes, in the compelling and entertaining video presented below, explains another big problem with Obamacare’s AV regulations: They outlaw 40 percent of possible AVs above the 60 percent minimum. That is because the AVs defined as floors in the law for the four “metallic” plans (60 percent for bronze, 70 percent for silver, 80 percent for gold, and 90 percent for platinum), are interpreted in regulations as narrow corridors of 4 percentage points.
Ocean Surgery Center explains why they chose the cash-friendly model (it’s not clear if they’re cash-only or also accept insurance). For regular readers of this blog, most of this will sound very familiar:
The critical flaw in our for-profit healthcare system is the absence of price transparency. This flaw has allowed for price distortions to go unchecked, leading to inflated and often excessive medical bills…